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Saudi Arabia – key to Gulf offshore recovery

Exploration and production (E&P) spending by the world’s largest energy firm, Saudi Aramco, increased five-fold between January 2016 and August 2017, according to experts.

It is understood that the state-owned company is also planning to expand its network of “long term agreement” (LTA) service providers from the current five to as many as ten or more. If this strategy goes ahead, it could result in a significant upturn for a number of currently over-tonnaged offshore service vessel companies operating in the region.

No details are available from the energy major but Koh Chen Tien, chairman of Makamin Offshore Saudi, told delegates at Seatrade Offshore Marine Workboat Middle East in Abu Dhabi last week that Saudi Aramco is thought to be doubling the current number of its five LTA partners, with new contractors possibly including Aker Solutions, Lamprell, Subsea 7, Sapura Energy and Technip.

If successful, these companies would join the exclusive club of existing LTA members – Dynamic Industries of the US, a partnership of India’s Larsen & Toubro and Emas of Singapore, McDermott, also of the US, UAE-based National Petroleum Construction Company, and Italy’s Saipem.

Market intelligence suggests that the Saudi energy giant is planning to expand offshore production capacity at the Marjan, Berri, and Zuluf offshore fields which could boost capacity by as much as one million barrels a day. In recent months, Koh said, Saudi Aramco has awarded contracts on both the Marjan and Berri field expansion projects.

Part of Saudi Aramco’s drive is to expand capacity, but part is also to offset declining production in some existing fields, according to experts. The strategy is likely also to be related to the company’s plans to list five per cent of its stock on one or more stock exchanges, yet to be announced, within the next two to three years.

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